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Economic Reforms

World Bank Approves $800 Million Loan for Uzbekistan’s Economic Reforms

The World Bank has approved an $800 million concessional loan package to support Uzbekistan’s ongoing structural reforms, aimed at reducing poverty, creating jobs, and expanding private sector-led growth. The financing is designed to help the government enhance competition, strengthen social protections, and foster a more dynamic economic environment. The financial support will fund a broad set of policy initiatives, including mitigating the impact of energy tariff increases on low-income households, advancing gender equality in the workplace, and expanding access to social services for vulnerable populations. The package also targets reforms in key sectors such as telecommunications, agriculture, and energy, while supporting greater integration of Uzbekistan into global trade networks. With favorable long-term repayment terms, the loan will reduce the country’s debt servicing costs and free up government resources for economic and social development. One of the central measures backed by the package is a significant boost in financial assistance for low-income families. Annual cash transfers per household will increase from UZS 270,000 to UZS 1 million to offset the rising costs of electricity, heating, and gas. The World Bank package will also support legislation to protect women from sexual harassment and workplace discrimination, including safeguards against employment bias related to pregnancy or childcare responsibilities. Reforms will open the provision of social services to private and non-governmental organizations, enabling greater coverage and efficiency. Among other key initiatives is the establishment of a National Investment Fund to manage and privatize state-owned enterprises. The creation of an independent telecommunications regulator is expected to promote competition, while new agricultural risk insurance schemes and liberalized cotton pricing aim to strengthen resilience and market access for farmers. Textile companies will be permitted to buy cotton directly from producers at flexible prices. The reform agenda also focuses on trade liberalization, including the removal of exclusive rights in strategic sectors such as energy, oil and gas, and agriculture. Export procedures will be simplified, and new regulations will promote private participation in electricity distribution and allow renewable energy producers to sell directly to consumers. Energy efficiency and climate policy are integral to the package. Uzbekistan plans to establish a National Energy Efficiency Agency and introduce incentives for solar power, heat pumps, and energy-efficient building retrofits. Public procurement processes will incorporate environmental criteria to support sustainable products and services. According to a World Bank report released in July, Uzbekistan’s economy grew steadily between 2010 and 2022, with per capita GDP rising by an average of 4.2% a year, outpacing the regional average. However, the report noted that growth has relied heavily on capital investment rather than productivity gains, and that deeper reforms are needed to build a more competitive private sector.

Economic Growth

Uzbekistan Emerges as One of Europe and Central Asia’s Fastest-Growing Economies

Uzbekistan is on track to be one of the five fastest-growing economies in the broader Europe and Central Asia region next year, according to the World Bank’s Europe and Central Asia Economic Update, Fall 2025. The report projects Uzbekistan’s gross domestic product will expand by about 6.2% in 2025 - well above the regional average amid an overall slowdown across emerging European and Central Asian markets. Overall regional GDP growth is expected to ease to roughly 2.4% in 2025, down from 3.7% in 2024, as weaker output in Russia drags on the aggregate. Central Asia as a whole continues to stand out. The World Bank notes that countries in the region are collectively growing around 5.9% - making it the fastest-growing part of Europe and Central Asia for the third straight year. Within that group, Tajikistan is also forecast to grow by 7%, Kyrgyzstan by 6.8%, and Kazakhstan by 5.5%. That performance keeps much of Central Asia well ahead of Europe’s advanced economies, which are expected to grow by just over 1% on average. Turkmenistan is excluded from the World Bank’s regional calculations because it does not publish internationally comparable economic data. For Uzbekistan, in particular, inclusion among the region’s top performers marks a sharp turnaround for a country that, less than a decade ago, was largely closed to global markets. By way of comparison, according to the World Bank, Uzbekistan’s economy is about eight times larger than Kyrgyzstan’s and roughly seven times larger than Tajikistan’s. In 2024, Uzbekistan’s gross domestic product was roughly $105 billion, compared with approximately $14 billion for Kyrgyzstan and $15 billion for Tajikistan. Remittances and Investment Fuel Expansion Rising income from abroad and expanding investment at home due to an increasingly investor-friendly climate are the twin engines of Uzbekistan’s boom. The World Bank attributes its upgraded forecast partly to stronger-than-expected remittances and higher capital spending. In the first half of 2025, remittances sent home by Uzbek workers - mainly from Russia, Turkey, and South Korea - jumped 27% year-on-year to reach around $8.2 billion, providing a surge in household consumption. At the same time, both public and private investment are climbing. Government spending on infrastructure and industrial projects remains high, and foreign capital is flowing in at record levels. According to Uzbekistan’s Ministry of Investment, Industry and Trade, foreign direct investment reached about $10 billion in 2024, the highest on record. Projects span energy, agriculture, and information technology, with investors from South Korea, China, the Gulf states, and Europe among the most active. The International Monetary Fund’s 2024 Article IV Consultation observed that “robust investment and resilient consumption” have kept growth well above the overall regional average. Reforms Since 2016 Have Laid the Groundwork This acceleration did not happen by chance. Since President Shavkat Mirziyoyev came to power in 2016, Uzbekistan has pursued a series of market-oriented reforms to dismantle decades of economic isolation and stagnation. The government unified the exchange rate, lifted currency restrictions, and simplified customs and tax rules. It began privatizing state...

Economic Growth

World Bank: Central Asia to Lead Regional Growth in 2025 Despite Global Slowdown

Economic growth in Europe and Central Asia (ECA) is slowing but remains resilient amid global and regional challenges, according to the World Bank’s latest Europe and Central Asia Economic Update: Jobs and Prosperity, released on October 7, 2025. The report projects GDP growth in the region at 2.4% in real terms this year, down from 3.7% in 2024. The slowdown is primarily attributed to weaker growth in Russia. However, excluding Russia, which accounts for about 40% of the region’s total economic output, growth is expected to hold steady at approximately 3.3% in both 2025 and 2026. “Developing economies in the region need bold reforms to turn resilience into stronger growth in productivity, output, and jobs,” said Antonella Bassani, World Bank Vice President for Europe and Central Asia. She stressed the importance of strengthening the private sector, improving education systems, and attracting more private investment to generate quality employment and address demographic changes. Central Asia remains the fastest-growing subregion for the third consecutive year, with growth expected to rise from 5.7% in 2024 to 5.9% in 2025. The World Bank attributes this momentum to increased oil production in Kazakhstan, higher remittance inflows, and rising public and private investment. Turkey and Poland are also highlighted for their strong performance, with forecast growth rates of 3.5% and 3.2%, respectively, supported by solid consumer demand and capital investment. Despite these positive signals, the World Bank warns that sluggish growth and weak reform momentum are exacerbating challenges in the labor market. While employment across the ECA region has expanded by 12% over the past 15 years, particularly in the services sector, many of the new jobs are low-skilled and offer limited income potential. Demographic shifts pose another challenge. The region’s working-age population is projected to shrink by 17 million in the coming decades, especially in Eastern and Central Europe and the Western Balkans. In contrast, Central Asia and Turkey are expected to see population growth, intensifying the need to generate sufficient employment opportunities. The report recommends that countries invest in infrastructure, education, and private-sector development to improve productivity. “Each country can tailor its approach to best use its assets, human talent, physical infrastructure, institutions, and natural resources,” said Ivailo Izvorski, World Bank Chief Economist for Europe and Central Asia. In Central Asia, economic growth is expected to be driven by expansion in agrifood and livestock processing, transport and logistics along Eurasian trade corridors, renewable energy investment, and tourism development. The World Bank notes that these sectors, supported by the region’s cultural and natural heritage, could help position Central Asia as one of the world’s most dynamic emerging markets.

Economy

World Bank Warns Tajikistan on Limits of Migration-Driven Growth

Tajikistan has made notable strides in reducing poverty over the past decade, but sustaining this progress will require a shift away from reliance on labor migration and remittances, according to a new World Bank report. The Poverty and Equity Assessment in Tajikistan notes that the share of people living in poverty fell from 56 percent in 2010 to around 20 percent in 2024. During the same period, the middle class expanded from 8 percent to 33 percent of the population, with 35 percent of households joining its ranks between 2021 and 2023. However, these gains have largely been driven by remittances, which consistently account for more than 30 percent of GDP, rather than domestic job creation. Job Creation Remains Weak Employment generation, however, remains limited. As of 2022, only 40 percent of the working-age population was employed, the lowest rate in the region, while female labor force participation stood at just 21 percent. Inequality has also worsened. The Gini coefficient rose from 32 to 38 between 2021 and 2023, with rural and remote areas most affected due to poor infrastructure and weak market access. Education poses an additional constraint. In 2023, 31 percent of children were not attending school, especially at higher grade levels. Contributing factors include financial hardship, distance to schools, and low parental education. Many university graduates either take low-paid jobs or emigrate. World Bank Recommendations The World Bank urges Tajikistan to transition from a remittance-dependent model to one grounded in domestic employment and economic resilience. Key recommendations include: modernizing agriculture with climate-resilient technologies; promoting labor-intensive private sector growth, particularly in agricultural processing, services, and small enterprises; expanding access to education, vocational training, and digital infrastructure, especially in rural areas; strengthening targeted social support for vulnerable households. “Tajikistan’s progress in poverty reduction is impressive, but sustaining and deepening these gains requires a rebalancing of priorities,” said Wei Winnie Wang, the World Bank’s Acting Country Manager in Tajikistan. She emphasized that improving domestic job creation, reducing spatial inequality, and investing in human capital would help build a more inclusive and sustainable economy. Government Response Tajikistan’s Ministry of Economic Development and Trade acknowledged that the report’s findings align with national development priorities. Deputy Minister Ahliddin Nuriddinzoda highlighted the role of the Poverty and Middle Class Expansion Council, established with World Bank support, as a platform for monitoring poverty and shaping related policy. According to the ministry, the World Bank’s current portfolio in Tajikistan includes 26 projects worth $1.9 billion, focused on infrastructure, human capital, and institutional reforms. The International Finance Corporation has also invested more than $70 million in the private sector.

Child Poverty

Uzbekistan Halves Child Poverty in Four Years

Uzbekistan has achieved a significant reduction in child poverty over the past four years. According to UNICEF Representative Regina Maria Castillo, the child poverty rate dropped from 21.5% in 2021 to just 11.4% in 2024, effectively cutting the figure in half. Speaking at an international forum in Namangan, Castillo credited deliberate government policy for the 10-percentage-point decline. She emphasized that government-funded social benefits, including child allowances and pensions, played a critical role in lifting families out of poverty. Without these support mechanisms, she noted, child poverty could have sharply increased during the same period. Castillo also highlighted the importance of universal state-provided services, such as education, healthcare, and child protection, as essential pillars for developing human capital. She stressed that prioritizing child poverty reduction within broader socio-economic policy is vital, adding that UNICEF stands ready to support the Uzbek government through a multi-sectoral approach. Reducing poverty has become a central national priority in Uzbekistan. President Shavkat Mirziyoyev has set an ambitious target: to lower the national poverty rate to 6% by the end of 2025 and to eradicate absolute poverty entirely by 2030. These goals build on substantial progress already achieved. According to official figures, approximately 7.5 million people have been lifted out of poverty in recent years. The national poverty rate declined to 8.9% in 2024, down from around 23% a few years prior. The World Bank estimates that poverty in Uzbekistan has halved since 2015, a rate of decline faster than the regional average. At the Namangan forum, Mirziyoyev announced that as of mid-2025, the poverty level had dropped further to 6.8%, placing the country on track to meet its 6% year-end target. “Thanks to consistent reforms, 7.5 million people have been lifted out of poverty… The objective is to reduce this to 6% by year-end,” he said. “By 2030, Uzbekistan has every opportunity to completely eradicate absolute poverty and we will definitely achieve this.” Several key drivers underpin the country's progress. Rising household incomes account for roughly 60% of the recent poverty reduction, according to the World Bank. With the economy nearly doubling in size over the past eight years, economic growth has translated into higher wages and job creation, lifting many families above the poverty line. Another major contributor has been the expansion and modernization of social benefit programs. Increased spending on pensions and direct aid has protected millions from falling into extreme hardship. Notably, during the COVID-19 pandemic, Uzbekistan mobilized $8 billion for free medical supplies and direct payments, which prevented an estimated 5.2 million people from falling into the “poverty trap.” Looking ahead, sustaining these gains will hinge on job creation and human-capital improvements, sharper targeting in social protection, and stronger climate resilience - especially in rural regions. UNICEF’s 2024 situation analysis likewise flags regional disparities in child poverty and stresses better services for large, low-income households. The World Bank’s climate assessments, meanwhile, warn that rising temperatures and mounting water stress could push vulnerable rural families back into poverty without quicker adaptation in agriculture...

Rogun Dam

Tajikistan’s Rogun Dam Delayed as World Bank Freezes Funding

The future of Tajikistan’s flagship infrastructure project, the Rogun Hydropower Plant, has been thrown into doubt as the World Bank and other development partners delay financing until the government fulfils key conditions, Nezavisimaya Gazeta reported. The move reflects growing concerns among environmental groups and downstream communities in Uzbekistan and Turkmenistan over the dam’s ecological risks to the Amu Darya River. A Strategic Asset With Mounting Costs The Rogun project, often hailed as Tajikistan’s greatest national undertaking, is central to the government’s ambitions for energy independence and regional electricity exports. But it also represents one of the country's most significant financial liabilities. Standard & Poor’s Global Ratings recently affirmed Tajikistan’s sovereign credit rating at “B/B” with a stable outlook, but cautioned that Rogun is so costly it may never generate sufficient returns. The agency warned that the project could push the national budget into deficit by the end of 2025. Construction of the dam began in 1976 under the Soviet Union but was suspended during Tajikistan’s civil war. Attempts to restart the project in the early 2000s stalled over disagreements with Russian partners. In 2016, the government relaunched the project with support from the World Bank, awarding the main construction contract to Italy’s Salini Impregilo (now Webuild). That same year, the Vakhsh River was diverted and dam construction resumed. Two turbines were commissioned in 2018 and 2019, but significant progress has since slowed. To complete the plant, Tajikistan must install six additional turbines, raise the dam from its current 135 meters to the planned 335 meters, and secure an estimated $6.4 billion in new funding, roughly 40% of the country’s projected GDP for 2025. Conditions for Continued Support The World Bank has suspended further financing until Tajikistan presents a credible financing strategy that avoids unsustainable public debt, finalizes long-term electricity export agreements, and implements robust dam safety protocols. Without these conditions in place, the Bank has stated it cannot continue its support. Environmental opposition to the project has also intensified. The international coalition Rivers without Boundaries has warned that filling the Rogun reservoir could reduce Amu Darya river flows by more than 25%, accelerating desertification and endangering the livelihoods of up to 10 million people in Uzbekistan and Turkmenistan. Alexander Kolotov, a representative of the coalition, told Nezavisimaya Gazeta that the World Bank’s board is expected to review a report based on complaints filed by downstream communities, though no specific date has been set. Kolotov emphasized that Rogun poses one of the largest economic risks to Tajikistan and questioned whether international lenders should deepen their involvement. Broader Economic Fragility Tajikistan faces additional vulnerabilities. The country remains heavily reliant on remittances from labor migrants in Russia, lacks economic diversification, and is projected to lose its “least developed country” status in 2026, potentially curtailing its access to concessional aid and financing. For now, the Rogun Hydropower Plant stands as both a symbol of national aspiration and a looming financial gamble. Whether it becomes a cornerstone of regional energy security or a cautionary tale...